Interest rate fluctuations remain contentious with borrowers and brokers

Interest rate fluctuations remain contentious with borrowers and brokers. Enzo Mora CEO and founder of The Mortgage Brain looks at the bigger picture

Last month’s budget didn’t pull any rabbits out of the proverbial hat. One reaction was for some mortgage rates to increase slightly, but we’ve now had a 0.25% reduction in the Base Rate, it’ll be interesting to see how this plays out over the next few months. Across this year, we’ve had yo-yo periods of the rates on offer. While the ‘average’ fixed rates for a two, or five-year deal currently start with a ‘5’, better rates that begin with a low ‘4’ (or even 3!) may be on offer. This is generally applicable to loans of 60%, or less, of the value of the property. For borrowers coming off two, and five-year deals, they could see a bit of a price rise, although not as bad as it would have been a number of months back. Silver linings as they say.

Stamp duty price pressures

Speaking to our customers, some were surprised that the reduction in stamp duty thresholds brought in by the last government until 31 March 2025 were not upheld. Many first-time buyers and homeowners looking to move will pay more stamp duty from April next year depending on the property price. But in my experience, this could mean asking prices will be adjusted to take this rise into account. Rightmove’s latest House Price Index reports average new seller asking prices dropped by 1.4% between September and October. This is larger than the typical 0.8% drop for this time of year and was attributed to concerns about tax rises ahead of and after the Autumn Budget.

Fixer-uppers top of the pops

As we head into Christmas, we’re all looking for bargains, and canny home buyers looking for affordability are once again turning to fixer-uppers. Research by Rightmove reveals that 68% of renters see fixer-uppers as a more affordable route to property ownership, with an average 12% discount on these homes. The biggest motivator for renters purchasing a fixer-upper is the opportunity to buy at a lower price (73%) and for homeowners, it is to create the perfect home (73%). The average asking price of a fixer-upper home is £327,224, which is 12% (£44,634) lower than the current national average asking price of £371,858 for all types of home.

Brokers are in the know

The first question a first-time buyer often asks us is how much they will be lent according to their salary. We’re now seeing deals where the loan to income has risen to 5.5, or even 6 times their salary. This is one of many examples where there is a desire by the lenders to help these buyers. Of course, no one will be lent money if they can’t afford to make repayments but the higher the loan, the more there’s a need to look at your budget to make sure you are happy with the long-term costs and how this will affect any changes in circumstances. Whatever your situation, we fully assess the suitability of the options on offer and see how we can get the best rates. You can rest assured that as we operate in this sector day in and day out and have the qualifications and expertise, we’ll be able to deliver advice that absolutely meets your needs.